Survey Design
The survey consisted of a section asking about other investment and saving plans in addition to KiwiSaver that respondents may have, and information about their KiwiSaver account. This was followed by a section assessing knowledge of the KiwiSaver scheme, and scales assessing knowledge and perceived risk of investment in four investment asset classes commonly invested in by KiwiSaver scheme providers. This was followed by a KiwiSaver Investor Profile, an Impulsive Sensation Seeking scale, and an Investment Risk Attitude scale. The survey concluded with questions on the demographic variables of the
respondents.
Recruitment and Characteristics of Respondents Recruitment
The survey was circulated in both hard copy paper form, and online using the survey software package, Qualtrics (found at http://www.qualtrics.com/). Surveys were circulated around various local businesses for their employees to answer. Paper questionnaires, and links to the online survey were also circulated around individuals in the general population who, in addition to filling out their own survey, were encouraged to get other people to fill them out. A total of 134 respondents answered the surveys, which included 87 members of KiwiSaver and 47 non-members.
Demographics
Questions on age, gender, and relationship status, number of children, education level, employment status and income were asked at the end of the survey. Each question had a refuse to answer option for those who did not feel comfortable answering, despite the
anonymous nature of the survey. Table 3.1 shows the demographics of respondents for both members and non-members of KiwiSaver.
Table 3.1
Demographic Characteristics of Respondents
Age % of members % of non- members Under 20 1.1 2.1 20-29 26.4 14.9 30-39 19.5 12.8 40-49 19.5 23.4 50-59 12.6 29.8 60-65 10.3 8.5 66 or over 8.0 6.4 Refuse to answer 2.3 2.1 Gender Male 49.4 66.0 Female 49.4 31.9 Refuse to answer 1.1 2.1 Relationship status Single 26.4 14.9 Married 55.2 66.0 De facto 14.9 6.4 Divorced 1.1 6.4 Widowed 0 2.1 Refuse to answer 2.3 4.3
Table 3.1 continued Dependants None 63.2 57.4 One 9.2 10.6 Two 21.8 14.9 Three or more 4.6 14.9 Refuse to answer 1.1 2.1 Level of education No formal qualification 0 0 Secondary school qualification 10.3 19.1 Vocational qualification 14.9 8.5 Bachelor’s degree 25.3 31.9 Higher degree 27.6 21.3 Doctorate 19.5 14.9 Refuse to answer 2.3 4.3 Employment status Unemployed 0 4.3 Part time 29.9 12.8 Full time 65.5 70.2 Self employed 0 8.5 Retired 3.4 2.1 Refuse to answer 1.1 2.1
Table 3.1 continued Earnings per annum
$0 – $29,999 18.4 12.8 $30,000 - $59,999 27.6 6.4 $60,000 - $89,999 17.2 31.9 $90,000 - $119,999 13.8 10.6 $120,000 - $149,999 6.9 6.4 $150,000 + 6.9 10.6 Refuse to answer 9.1 17.0 Not answereda 4.3 a
These respondents were unemployed.
There were no significant differences between members and non-members with respect to any of the demographic variables measured. A significant number are working part time, but this is likely to reflect the sampling methods which would have disproportionately captured a subset of the general population, which is students, who are working part time and were enrolled automatically into KiwiSaver. A further breakdown of the sample shows 58% of part time workers are aged 20-29, or alternatively, 65% of 20-29 year olds are working part time. The question on earnings per annum was the most sensitive, with twelve percent refusing to answer.
KiwiSaver Questionnaire
The questionnaire was preceded by an information sheet informing respondents about the aim of the study, and that anonymity for the respondent will be preserved. The information
sheet can be viewed in Appendix A. This was followed by the survey questionnaire which can be viewed in Appendix B.
KiwiSaver Information
The first question asked respondents to select from a range of options listed in Table 3.2, other investments or savings plans that they held. Both members and non-members of KiwiSaver answered this question. The next question asked respondents if they were in KiwiSaver. If they answered “no”, respondents were instructed to skip the rest of the section on KiwiSaver information and proceed to the ‘knowledge about KiwiSaver’ section. Table 3.2
Other Investments and Saving Plans Held Bank Term deposit
Commercial rental properties
Directly owned shares in public companies Investment with a finance company
Residential rental properties
Unit trusts or other managed fund investments Workplace superannuation scheme
Other
None of the above
KiwiSaver members were asked what year they were enrolled in the scheme, who their provider was, what type of fund they were invested in, and the main reason they were currently invested in that fund. Because of the variability in naming conventions and asset allocations of various funds offered by scheme providers, respondents were asked what type of fund best described their current investment fund. The options for type of fund invested
in are given in Table 3.3 and were taken from a description of the types of funds available on the KiwiSaver website.
Table 3.3
Types of KiwiSaver Fund Invested In
Cash (low risk) Bank deposits and other fixed interest investments Conservative (low
to medium risk)
A high proportion in bank deposits and fixed interest investments, and a lower proportion in growth assets such as shares and property Balanced
(medium risk)
A more equal split between higher risk growth assets such as shares and property, and more stable investments including fixed interest and bank deposits
Growth (medium to high risk)
A high proportion of shares and property with a lower level of bank deposits and fixed interest
Aggressive (high risk)
Mainly shares
Lifetimes option Adjusts an investor's allocations to the five main asset classes based on his or her specific length of time to the standard New Zealand
Superannuation qualification age (currently 65) Note. Adapted from http://www.kiwisaver.govt.nz/providers/about/funds/
A list of the main reasons for current investment in a KiwiSaver fund is given in Table 3.4. A common theme running through these reasons is that they are all apparent salient factors which can affect fund choice. With the exception of being placed into a default fund, the other reasons could be consciously considered by respondents. Advertising and the scheme provider being a main bank reflected the reputation of the scheme.
Recommendations by family, friends, or financial advisors reflected the influence of opinions and arguments from other people, while low fees and good performance reflect
specific aspects of a particular fund. Matching risk level is included because scheme providers will often provide a measure of risk scale on their websites, or in their investment statements, and responses to scores on these scales may prompt members to choose a fund based on their risk level.
Table 3.4
Main Reasons for Investment in Current Fund It was the fund you were allocated by the IRD It was the fund you were allocated by your employer The fund best matches your level of preferred risk The scheme provider is your main bank
It was recommended to you by a family member or close friend It has comparatively low fees
It was recommended by a financial advisor Advertising
It has a proven historical performance of giving good returns Other
Respondents were asked how many times they changed their investment allocation between different funds. Answers could range from a minimum of zero to a maximum of five or more. A question on contribution level allowed respondents to answer zero, two, four or eight percent of their gross wage or salary. If respondents answered zero percent they were instructed to answer the next question on why they were contributing zero percent, otherwise they skipped to the next question asking if they made any additional contributions. The reasons given for contributing zero percent could be; taking a contributions holiday, significant financial hardship, serious illness, or unemployment.
Finally, respondents were asked how often they checked their KiwiSaver account balance with answers ranging on a scale from never to once a week. The last question asked if KiwiSaver savings were going to be used for a house purchase.
Knowledge about KiwiSaver
Eight questions, shown in Table 3.5, asked respondents about their knowledge of the design of KiwiSaver and its benefits. Four were multiple choice questions, while the other four were open response questions. Respondents were free to answer that they were ‘unsure’ or ‘did not know’ for the open response questions, and an ‘unsure’ option was provided for the multiple choice questions.
Table 3.5
KiwiSaver Knowledge Questions
After how many years can you make a savings withdrawal to put towards buying a first home?a
What can be withdrawn to put towards buying a first home?b What is the maximum amount of the first home deposit subsidy?a
After how many months since beginning making contributions to KiwiSaver can members take a contribution holiday without a reason?a
How many years can the maximum length of a contribution holiday be?a
Are you able to permanently leave the KiwiSaver scheme after being a member for more than eight weeks?b
Who do you contact if you want to change to another KiwiSaver scheme?b Who do you contact to keep track of your overall KiwiSaver balance?b a
Open questions b
Questions on the KiwiSaver knowledge scale were scored one for correct and zero for incorrect. Scores on the KiwiSaver knowledge scale could therefore range from a minimum of zero to a maximum of eight.
This was followed by scales on self-rated knowledge, and perceived risk of investment about four investment asset classes that are commonly invested in by the majority of funds offered by KiwiSaver scheme providers. The investment asset classes are shares, property, fixed interest, and term deposits. The knowledge of the investment classes was self-assessed on a five point scale ranging from poor (1) to excellent (5). Perceived risk of investment was rated on a five point likert scale from very low risk (1) to very high risk (5).
KiwiSaver Scheme Risk Profile
The KiwiSaver Scheme Risk Profile questionnaire is a four question scale measuring specific risk attitudes to investing in KiwiSaver. It was sourced from the websites of
scheme providers ANZ, OnePath, and National Bank. Combined, these three providers have the most KiwiSaver members and assets under management (Morningstar, 2012).
Therefore, the scale is likely to be the most widely used risk profile questionnaire used by KiwiSaver members. It was included to check convergent validity with other scales measuring risk and to test its internal reliability and predictive validity about investment fund choice. Four questions were asked about investment objectives, attitudes, risk
tolerance to losses, and knowledge surrounding financial investments. Answers were scored on a five point scale from the most conservative response (1) to the least conservative (5) response. Scores could therefore range from a minimum of four for the most conservative investor, to a maximum of twenty for the least conservative. A supplementary question asking if a similar risk profile questionnaire had been taken before was added to assess the prevalence of KiwiSaver members taking these short risk attitude questionnaires.
Impulsiveness Sensation Seeking Scale
The Impulsiveness Sensation Seeking Scale consisted of nineteen true or false
statements. Responses were scored one for true, and zero for false, and the second and sixth questions were reversed scored. Scores could range from a minimum of zero, to a maximum of nineteen. This scale has good internal reliability coefficients ranging from .77 to .82 among various reported studies (Zuckerman, 1994).
Investment Risk Attitude Scale
The Investment Risk Attitude Scale is a subjective measure designed specifically to measure attitudes towards investment risk (Warneryd, 2001). The Investment Risk Attitude Scale contains six items which were rated on a five point scale from strongly disagree (1) to strongly agree (5). The first, second, and fourth items were reversed scored. Scores can range from a minimum of six, to a maximum of thirty, with higher scores indicating lower levels of risk aversion. This scale has good internal reliability with a Cronbach alpha of .83 (Warneryd, 2001).